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Telstra chief David Thodey is confident his network applications and services business can snare a major share of $1 billion of technology infrastructure contracts, after a strong result in the first half.

While Telstra revenue overall grew by 1.2 per cent in the six months to December 2011, network applications and services (NAS) revenue grew by 19.4 per cent to $579 million.

The growth was buoyed by major customer wins with Origin Energy and South Australia Health, as well as increased business demand for unified communications – such as video conferencing – and managed data networks.

The results showed Telstra had continued to succeed in attracting customers to move information technology infrastructure and services onto its network.

“We are starting to see some really good growth in this area. Half revenue was up 19.4 per cent, but what is more gratifying is that the sales pipeline is very strong,” Mr Thodey said.

“We see about $1 billion of contract value currently being decided in the market, which is a very good sign.”

Telstra chief operations officer Brendon Riley, who has direct responsibility for the NAS business, said it was growing across all of its products. NAS’s suite of products includes cloud computing, unified communications and intelligent networks, which allow numerous services to be offered across its networks.

Managed network services revenue grew by 24 per cent, or $75 million to $387 million, predominately due to strong growth in video conferencing.

Last March, Telstra acquired video conferencing company iVision, which Mr Thodey said had been a successful addition. iVision contributed $34 million to total NAS revenue for the half.

Morningstar analyst Peter Warnes said the improved services Telstra was now offering were, in part, a legacy of investments former CEO Sol Trujillo had made in network infrastructure.

He said Telstra was very well positioned in a growing market for hosted network services and predicted NAS would generate $2 billion revenue within five years.

“I can see that within three years, comfortably being $1.5 billion to $1.75 billion a year or higher, then up to $2 billion in five years. There are lots of corporations and government departments looking to outsource this kind of operation and Telstra has the capacity to be their first choice.”